When Boris Johnson uttered the words “F*** business”, corporate Britain felt understandably aggrieved. Then it became clear that the former prime minister’s contempt was not restricted to one section of society but extended across most of it, so the business community stopped taking it quite so personally.
Keir Starmer has not, at least in public, echoed Johnson’s memorable phrase and neither has his chancellor, Rachel Reeves, but many business people are beginning to feel that the current government shares Johnson’s attitude. If there is anything in Reeves’s forthcoming Spring Statement that looks anti-business, then the conviction will take hold that this administration is at worst, hostile to business or, at best, does not understand it.
Many business owners were blind-sided by the changes to employers’ National Insurance contributions. The Employment Rights Bill, now heading towards the statute books, is seen by some, particularly smaller, companies as a further unhelpful burden. The Federation of Small Businesses said last month that the Bill was “causing dread” among its members. Two-thirds of members said the Bill’s proposals would make them reduce hiring, and one third said they planned to cut their number of employees before the Bill’s proposals were activated.
The government’s response to these criticisms is to insist that it consulted widely before launching the legislation and continues to do so on certain specific aspects of the Bill. Consultations are emanating from government departments on a huge scale. It seems that on issues ranging from new mayors to planning procedures, the penalties for hare coursing, grants for preventing homelessness or national nuclear policy, HM government wants to hear your views. If you feel strongly about how the law on contempt of court should change, you only have until the end of this month to say so.
Consultation can be a very useful way of developing policies and being alerted to potential pitfalls. It can also be used as a way of appearing to be open-minded when many options have already been discarded. When “consultation” is simply an opportunity to speak but not to be heard, it risks alienating those who took part.
This government sailed into power on a raft of goodwill, not least from a large proportion of people running businesses, both large and small. After the chaos of the previous fourteen years and the damage many of them had sustained as a result of Brexit, they welcomed a Labour Party which had been at pains to distance itself from anything remotely close to Corbyn and the far left. A campaign, led by Rachel Reeves, to woo them with smoked salmon and scrambled eggs breakfasts had persuaded most that Labour was serious about engaging positively with business.
The post-election victory emphasis on growth was seen as underlining that, since the only way to fulfil Reeves’s ambitions depended on a thriving commercial sector. Disappointment in some quarters over the failure to move speedily to reverse the worst of Brexit was tempered with some conviction that, despite the “non, non, non” rhetoric, Starmer would steadily take the country closer to the essential alignment with the EU that UK companies need. A move into the Single Market would then only be a matter of time.
Nine months on, though, and the lack of movement on the Brexit issue has been increasingly frustrating. Much more of a shock, though, was the move on national insurance. No one recalled any hint of that being given at a Reeves breakfast or in any “consultation” or even phone call. The increase in the rate to 15 per cent, would not have caused such upset had it not been accompanied by a lowering of the level at which payments become due from £9,000 to £5,000.
Industry pointed out immediately that this was a clear disincentive to employing part-time workers and the hospitality and retail sectors are already demonstrating this, shedding staff and closing outlets. Longer term, the changes should encourage greater automation and, perhaps, boost productivity but the UK economy, as the latest gloomy news from the ONS makes clear, needs growth, not job losses. At a time when the government has declared its intention to get many more people off benefits and into paid employment, lessening the availability of part-time work seems simply perverse.
The Confederation of British Industry, which still speaks for most of the major companies in the UK, has tried to avoid too much overt criticism of the government. Its chairman, Rupert Soames, a grandson of Winston Churchill knows about treading a delicate political line. In a speech last month he praised Reeves for bravely pushing ahead with long-term projects such as the Lower Thames Crossing. But then he reached for his dagger, accusing her of putting a hole in “the confidence and trust” of business. “This,” he warned “is not conducive to encouraging business to invest.”
To rectify that, the government would truly have to listen to business, he said, and “acknowledge that the sum of all wisdom does not reside exclusively in Whitehall”.
The Spring Statement could provide an indication that Reeves heard what he said. It might encourage her to restart her breakfast round, maybe skipping the smoked salmon for economy’s sake.
